@Natalie Kraft this is the exciting part about real estate investing, the investigation and data gathering. I love it!
the answer initially appears to be in your statement "The units are renting out at slightly below market (maybe $100-200 per unit), but they are in significantly worse shape than other units on the market." This sounds, at first reading, like a big investment for little return. That being said the $100 to $200 under market is not really what I would call "slightly" under market. The gap between the two numbers is significant and is the difference of $6k-12k in gross rent revenue. Whenever @Dan Handford and I are looking at a deal, we shop all local competition as if we were going to rent from them. We look to see what others are offering in terms of amenities and upgrades and what they are getting in return for their efforts in rent revenue. put yourself in the mind of your potential customers. This is a crucial part of purchasing any value add deal in my opinion. I hope this helps. Let us know what you find when you tour the property.
@Natalie Kraft you could talk to local property managers and see what they think is the going market rent in the immediate area for the same size apartments.
It is likely that you would need to spend some money to upgrade the properties, then push the rents up. in new leases you could state the number of occupants allowed in the units.